7-11 Case Study

Supply Chain Management
Case Study 1 Seven-Eleven Japan Co.
BackgroundSeven-Eleven is a famous convenience store. And it is set up its first store in Tokyo in May 1974, it was found by Masatoshi Ito, the company was first listed on the Tokyo Stock Exchange in October 1979 It had increased its share of the convenience shore market since it opened. It success is greatly contributed to its careful planning, and its information system as well as distribution system. Q1 A convenience store chain attempts to be responsive and provide customers what they need, when they need it, where they need it. What are some different ways that a convenience store supply chain can be responsive? What are some risk in each case? Q3. What has Seven-Eleven done in its choice of facility location, inventory management, transportation, and information infrastructure to develop capabilities that support its supply chain strategy in Japan? Facility location

Seven-Eleven Japan based on its fundamental network expansion policy to increase efficiency to customers. Seven-Eleven opened the majority of its new stores in areas with existing cluster of stores. There are so many stores in a particular area. Around 50 to 60 stores are supported by only one distribution centre(DC), and this DC keep no inventory. This strategy can lower the inventory handling cost, and to develop capabilities that support its supply chain strategy in Japan. Inventory management

Seven-Eleven offer its stores a choice from a set of 5000 stock keeping units. Each store carried on an average about 3000 stock keeping units depending on the local customer demand. There are four categories of food including chilled-temperature items; warm-temperature items; frozen items; and room temperature items. Each category is severed with its special needs in order to keep it fresh. Since, Seven-Eleven responds very quickly to order, with store mangers placing replenishment orders less than 12 hours before they are supplied....

...ISOM 319-E Operations Management
Case: Seven-Eleven Japan
February 7, 2013
Part A
Some different ways that a convenience store chain can be responsive are they can intergraded information systems, additional capacity which are manufacturing, distribution centers and retail store, they also can increase safety inventory, increased number of deliveries, and increased product variety and availability.
Part B
Some challenges and risks with micro-matching supply and demand using rapid replenishment are the risk for local capacity which is capacity is decentralized, leading to poorer utilization. The risk for local inventory is obsolete inventory, and it needs the extra space. The risk for rapid replenishment is increasing the cost of replenishment and receiving. The most risk is when supply and demand are not matched, and inventory excesses and shortages occur. Also, it will increase the transportation cost.
Part C
1. Facility location: Majority of its new stores in areas with existing cluster of stores. There are many stores in a particular area. Entry into any new market was built around a cluster of 50- 60 stores supported by a distribution center. Such clustering gave seven eleven Japan a high density market presence and allowed it to operate an efficiency distribution system.
2. Inventory management: Four categories of food are chilled temperature, warm temperature, frozen and room temperature. Seven Eleven’s information...

...﻿CASE Analysis: Seven-Eleven Japan Co.
The case describes how seven eleven has successfully established an innovative business model.
Toshifumi Suzuki, CEO of Seven eleven Japan (SEJ), described Seven Eleven Stores as:
“Stores where you can find a solution for any of your daily life’s problems. We always try to plan and design a store in such a way that our store neighbours, in particular, can get whatever they need at any time they want”
SEJ, headquartered in Japan, leads the world wide seven Eleven chain, which had 24,912 stores in 18 countries in March 2003.In 2003 ranking of retailers by market value, SEJ was number one in Japan. Since its establishment in 1974, SEJ has never experienced a fall in income or profits.
With 9,757 stores as of May, 2003, SEJ is the largest CVS chain in Japan. Its stores feature the same basic designs: large, highly visible sign in green, red and orange, a large store window, much brighter than average lightning and a spotlessly clean store. SEJ identifies their customer orientation, offering not only a rich assortment of products but total comfort to customers, as the source of SEJ’s rise to the top of the Japanese retail industry.
Industry Background
The Japanese Distribution System
Prior to 1974:
Traditional Japanese retailing consists of a conservative, multi-tiered system that combines large numbers of small wholesalers and retailers into complex exclusive networks. These networks are not based...

...Q1. Evaluate 7-Eleven's competitive advantage using the Michael Potter's Five Forces model.
7-Eleven, the largest convenience retailer store in the world has been operating in more than 15 countries and well known as franchise business that operated by independent business operators running local neighborhood stores. Despite the intense competition in the market, 7-Eleven has struggled to maintain their leader position in the market. In order to sustain their competitive advantage, 7-Eleven has used information systems to keep ahead of rising customer expectations and increasingly challenging business environment. The Potter’s Five Forces Model has been used to analyze and evaluate the competitive advantage of 7-Eleven.
7-Eleven currently have various competitors, which includes superstores, hypermarkets, convenience stores and even traditional markets. The intense competition has driven 7-Eleven to enhance their competitive advantage through several ways. 7-Eleven has been able to stand out due to their highly focused on customer-orientation and effectiveness of the information systems they used to keep track and analyze their customers’ demands that resulted in product differentiation. The high switching costs and low fixed costs of 7-Eleven also have prevented their rivalry from attracting their...

...Assignment #1 – MBA Choices in Finance
Assigned Class 2 – Due 11:55pm on Sunday Week 4
75 Points – two page paper
David Jetter graduated from college six years ago with a finance undergraduate degree. Although
he is satisfied with his current job, his goal is to become an investment banker. He feels that an
MBA degree would allow him to achieve his goal. After examining schools, he has narrowed his
choice to either Prentice University or Mount Alliance College. Although internships are
encouraged by both schools, to get class credit for the internship, no salary can be paid. Other
than internships, neither school will allow its students to work while enrolled in its MBA program.
David currently works at the money management firm of Dewey and Louis. His annual salary at
the firm is $60,000 per year, and his salary expected to increase at 3 % per year until retirement.
He is currently 28 years old and expects to work for 40 more years. His current job includes a fully
paid health insurance plan, and his current average tax rate is 26 %. David has savings account
with enough money to cover the entire cost of his MBA program.
The Ritt College of Business at Prentice University is one of the top MBA programs in the country.
The MBA degree requires two years of full time enrollment at the university. The annual tuition is
$65,000, payable at the beginning of each school year. Books and other supplies are estimated to
cost $3000 per year. David...

...What are some different ways that a convenience store supply chain can be responsive?
A convenience store can be more responsive by doing a variety of things. The stores can model what 7-11 did and have a variety of different locations with rapid replenishment. They can offer a variety of different services, such as a way to pay bills like electricity, gas, insurance, and telephone inside the store. They can also provide other services such as ski lift voucher pass, payment for mail order purchases, payment for online shopping, and even a meal delivery service. The store can also create a membership program. Allowing them to understand buying habits of its customers and foresee trends in product demands. Upgrading technology can also make the convenience store more responsive. They can do that by having POS registers that allow extra information to be inputted along with simple transactional information, to graphic order terminals that update store quantities and orders; these automation efforts also reduce the chances of human error. The convenience stores can also adopt a Centralized Distribution Center model, which allows for a more efficient system that can (ideally) service more than one outlet. The reduction in transportation costs become direct savings to the owners, unlike product savings (that run through the production and sales process leading to a few %).
Seven-Eleven’s supply chain strategy in Japan can be described as...

...﻿1. How has the convenience-store concept evolved in the United States.
A company called Southland Ice Company found 7-Eleven in Dallas, Texas in 1927. They initially started by selling ice blocks that were used to refrigerate food in homes. Later, an employee at one of the stores started offering common essential groceries such as milk, bread, and eggs on Sundays. Customers valued the convenience of this since regular grocery stores were closed for the weekend. As this become popular, the stores opened for extended hours during weekdays. The stores name was changed from the originally named Tote’m to 7-Eleven around 20 years after the opening because that is when they changed their operating hours daily from 7 in the morning till 11 in the evening. Moreover, the company began to open several locations into Florida through Washington D.C. A certain incident gave this national chain it’s defining characteristic of having extended hours. One time the store was so busy after a college football game that employees lost track of time and forgot to close at closing time. This convenience continued for workers who had late-night and early morning schedules and needed a convenient place to shop.
However, a threat to this chain was the fact that people only came for supplementary shopping and for picking up daily-use items that ran out at home. The majority of Americans shopped at supermarkets for all their...

...TABLE OF CONTENT
Executive Summary 1
1. Case Background 2
2. Facilities* 3
3. Transportation* 5
4. Information* 7
5. Inventory* 10
6. 7-Eleven in the United States* 117. Conclusion 11
Appendix 1 12
Appendix 2 13
*Note:
The content (page 3 to 11) is based on questions 1, 2, 3, 4 and 6, page 88 of the textbook “Supply Chain Management: Strategy, Planning & Operations” by Sunil Chopra & Peter Meinld (Pearson Education, 3rd Edition).
• Generally, questions 1 and 3 are answered by four categories of “Facilities”, “Transportation”, “Information” and “Inventory”. In each section, there is discussion about practices that SEJ has done or firms should do and the risks involved.
• Questions 2 and 4 are answered mainly in section 3 “Transportation”.
• Question 6 is discussed in section 6 “7-Eleven in the United States”
EXECUTIVE SUMMARY
The casestudy reports about the Supply Chain Strategy of Seven Eleven Japan (SEJ), the largest convenient store operator and franchisor in Japan.
Seven Eleven Japan provides several helpful understanding about achieving supply chain strategic fit in the convenient store industry. In this industry, responsiveness of the supply chain is the most important factor.
Firstly, SEJ has a set of facilities that are strategically responsive. Its facilities...